Happy Codification Day!

We warned you that this day was coming! The FASB issued Statement 168, The FASB Accounting Standards Codification^TM and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162 on Monday so...

...Forget everything you've ever learned about the accounting literature because it's all changed but GAAP hasn't. They swear. Oh except for something about private, non-governmental companies and their revenue recognition. We're sure that won't affect any of you.

Check out the Codification website here.

Good summary at: Codification Nation [FEI Financial Reporting Blog] Sphere: Related Content

Counting to Ten Helped us From Completed Throwing a Conniption Over This

Our feelings have been made known, on several occasions, regarding the FASB's inability to get the stones to tell Congress that they need to butt the fuck out when it comes to accounting rules.

So when Bob Herz, the FASB Chair, makes speeches at the National Press Club saying, "The investing public expects and deserves unbiased and transparent financial information that is not skewed to favor particular transactions, companies or industries," we almost blow a gasket, because, um, "WHAT HAVE WE BEEN SAYING TO YOU BOB?!? HAVE YOU BEEN LISTENING?"

The only thing that stops us is that maybe, just maybe, this is some super-duper double secret strategy to get the Sass from Mass and Maxine "Wait Until I Get My Hands On You, Goldman" Waters to step off from trying to boss around the Oracles of Double-Entry Accounting. Pipe dream? It's poss.

True, Herz and company would do well to take some lessons in snark, maybe courtesy of Jr. Deputy Accountant (who, we're sure would oblige), in order to give the give the big middle finger to Congress in person but I suppose baby steps are probably better than continued groveling.

FASB's Herz slams politicization of accounting [Reuters] Sphere: Related Content

Are You Ready For the Switch to FASB's Codification? You Don't Know What That Is?

We know our readers here at Tramp are on top of their shit. You all know that in one week the oracles of double-entry accounting roll out the FASB Codification. You're ready to rock out on this Codification.

"Tramp, WTF are you talking about" you say? You mean you haven't been anxiously awaiting the end of the likes of FAS 5 and FIN 46(R) as we know them? That's right my bean county friends. All this will be consolidated into what the FASB is deeming "Codification". Every shred of literature that makes up the Almighty God of your profession, generally accepted accounting principles, will be in one place.

Poppycock, you say? The FASB would never do something that would make our lives easier. It's true and apparently many don't even know about it:

The first surprise for some may be that this codification project is happening at all. Over 50% of 530 U.S. CFOs and senior comptrollers surveyed by Grant Thornton in late April said they didn't know about the rules restructuring, despite the fact that a preliminary version has been available for viewing and comment since January 2008.

You mean you've been too busy working to pay attention to this? You're right, 15 months really isn't long enough to get acquainted with something of this magnitude. Looks like you're not alone in that thinking. Now get the sleeping bags out at the office and get caught up. You've got a week.

Will the New FASB Code Change Accounting? [CFO.com] Sphere: Related Content

Figure This One Out

Once upon a time, the FASB assembled the Investors Technical Advisory Committee (ITAC) to provide investors' view on accounting rules written by the oracles in Norwalk. We're sure that seemed like a reasonable thing to do at the time.

What those wonks probably weren't counting on was the ITAC coming out and pretty much calling the FASB a bunch of lily-livered empty suits that will basically do whatever the likes of Barney Frank and Maxine Waters (oh, the fucking humanity) ask demand order them to do.

Reuters:

Citing a congressional hearing in March over mark-to-market accounting, the investor group said it had "grave concerns about what we believe to be a substantial erosion in the independence of the accounting standard setting process."

At the hearing, lawmakers told FASB Chairman Robert Herz to deliver new guidance on mark-to-market accounting within three weeks or face legislation changing the rule that had forced banks to write down billions of dollars in assets.

FASB bowed to pressure from Congress and the financial industry in early April by allowing banks more flexibility in valuing toxic assets.

In a twist of irony, members of the ITAC include Goldman Sachs and J.P. Morgan Securities. Whose, we'll give credit reluctantly here, bigwigs have come out in support of mark-to-market but are certainly (we may be going out on a limb here) paying money to the American Bankers Association.

The short: We knew the FASB was spineless but now we've got Goldman and J.P. Morgan types calling them out even though they likely pay lobbyists who were fighting against FAS 157.

Let's us know if you get this shitshow to make any sense.

Investor group says FASB's independence has eroded [Reuters] Sphere: Related Content

Oh, Them? The FASB? Yeah, Don't Pay Any Attention to Them

In a move that, once again, shows that when the U.S. Government wants the FASB to just shut up and do what it's told, the Feds are asking for a single set of accounting standards by the end of 2009.

This after somebody the Chairman of the FASB stated via dis song that it would be 10-15 years until convergence would occur.

In a vaguely written article at Accountancy Age, a "white paper" states that "convergence of its Generally Accepted Accounting Principles with the International Financial Reporting Standards will help 'revive' the financial system in the US."

First of all, we'd love for someone to explain just exactly how one uniform set of accounting standards will act as as a defibrillator for the entire economy and second, yes, it's all about us, Team America getting revived, thankyouverymuch.

US wants progress on single set of standards [AccountancyAge] Sphere: Related Content

Review Comments - 6.8.09

Making Up Values - CDO purchased for $9.50 by one Evergreen Fund was valued at $98.93 by another. Appears Reasonable. [Floyd Norris/NYT]

Baltimore: It Really Is That Bad - McNulty can only do so much...[Clusterstock]

FAS 166, 167 Putting Kibosh on Q's Expected This Week; SEC Forms Investor Advisory Committee - FEI Financial Reporting Blog Sphere: Related Content

Shocker of the Day: Congress is Owned by the Financial Services Industry

Transparent financial statements are so damn inconvenient anyway...

As speculated earlier here and reported today by the WSJ here, banks and other financial industry lobbyists didn't like the idea of the FASB wanting everyone to consolidate their off-balance sheet entities.

This after everyone threw a conniption over mark-to-market and had to play grabass with Congress in order to get that rule diluted to the more attractive idea of mark-to-whatever the fuck we say.

Barney Frank will certainly get to the bottom of this little annoyance as well and the FASB will fold like a cheap lawn chair. You know, per usual.

Financial Groups Try Delay Accounting Rule, Report Says [DealBook] Sphere: Related Content

FASB Passes Rule, Bankers Vow to Find New Ways to Hide Risky Assets and Massive Liabilities

So, the Oracles of Double-Entry Accounting passed amendments to FIN 46(R) yesterday: “The desire to provide additional transparency to investors was the key driver behind today’s decisions.”

Ok, so what that really means is that the FASB passed new rules on the interpretation of the off-balance sheet accounting rules originally issued in the shitstorm that followed Enron's little booboo. Banks were doing some fancy-schmancy things to get those not-so-good loans made to the dead and unemployed people off their books. The new amendment will force banks, as the party who absorbs a majority of expected losses or returns, to move tons of assets and their related liabilities onto their balance sheets.

Banks, shockingly, didn't approve:

The rule change will hurt banks and the economy by discouraging lending, said Wayne Abernathy, executive vice president at the American Bankers Association in Washington. “It will affect fee income and the economy’s ability to rebound on the lending side,” he said in an interview before the vote.

The good news is that Barney Frank has already gotten wind of this and Congress will soon be writing the accounting rules and we can all get back to living in a world where anyone can buy a house.

FASB Rule Will Force Banks to Move Assets Onto Books [Bloomberg] Sphere: Related Content

IASB Attempting to Start a Hip Hop-esque Fued with the FASB

Hip hop feuds. What would our ubiquitous pop culture world be without them? Well, thank all that is good and holy that now the accounting world has its own version.

John Smith (who is obviously upset about being left out of the This American Life episode) is calling out the United States from way over in Europe, in his dorky bean counter version of a dis song:

"If it doesn't adopt," [Smith] warned, the United States "will be the outlier and those countries already adopting and committing themselves to IFRSs will not accept a situation where the United States remains outside the system indefinitely, yet has a seat at the table."

Whoa. This is striking similar rhetoric to the old East Coast-West Coast days if you ask me. It's clearly a verbal retaliation to Bob Herz's earlier statement, and Smith is bringing it HEAVY. Words like "outlier" and "will not accept a situation" are obviously not going to sit well with his FASB rivals.

It strikes me that the evangelicalism of IFRS is still alive over in the EU while Team America, FUCK YEAH! is not too welcoming of the accounting "good news".

As you were.

U.S. "Will Be The Outlier" Without IFRS [CFO] Sphere: Related Content

The Resistence to IFRS Evangelism

FB4 firms like "hot topics" which translates into, "potential ways for making boatloads of cash".

Sarbanes Oxley was a hot topic. Now it's part of the routine. The Firms Madoff made off with their boatloads and now that all clients are all SarbOx legit, they're saying, "We'd like to revisit our audit fee" or in the UK, "lower your bloody audit fees you greedy wankers".

The new moneymaker is IFRS conversion. The push to conform to international standards came courtesy of the crack squad of regulators at the SEC under Bush 43. The target date was 2011, which everyone should have known was a joke since it took 12 years to roll out IAS 39.

Before my trip to the gallows at KPMG, trainings on IFRS were getting more and more common. Partners were talking to their clients early and often about getting all over this IFRS convergence like stink on a monkey.

The word on the street is that partners are drooling over the thought of engagement teams billing 40 hour weekends to cope with the complexities of IFRS conversion.

But now there are some problems. The pesky FASB is saying it'll be 10-15 years before convergence will occur. The new gang at the SEC isn't pushing IFRS like its predecessors.

Plus, CFO's in the States aren't too keen on the idea of getting this pulled off in 2 years, they know that the FB4 are going to bleed them out for the convergence, and, oh, there's talk about a financial meltdown or something that's making things complicated.

Not to worry though, FB4 partners are a crafty bunch. There will no doubt be more scheming to be had. They don't really have a choice, as one of my friends put it, "partners will take a free lunch these days".

Herz: No Convergence for 10-15 Years [CFO]

CFOs on IFRS: Forget about It [CFO] Sphere: Related Content

What Do We Want? The Right to Value our Level 3 Assets However We Want! When Do We Want it? NOW!

Lots of commentary from all ends of the blogosphere about the end of mark-to-market accounting for the banks. Not exactly the most sexy topic that's out there but it's getting lots of ink because the clowns in Congress are pretty much blaming it for everything but the disappearance of Jimmy Hoffa.

As one commenter put it, "Blaming mark-to-market accounting for the banking sector's woes is like blaming a polar bear stranded on an ice flow for global warming."

Now the best part: God Goldman Sachs is saying that relaxing the rule isn't going to help investors' confidence in the banks anyway. SHEESH.

Throughout this whole dog and pony show, the oracles of double-entry accounting at the FASB really proved themselves to be spineless. Per usual modus operandi, Congress threatens to take a bigger role in overseeing accounting rules and the FASB gets nervous and ultimately bows to the wishes of BFrank, Bingo to the Max, and Ed Perlmutter, who introduced HR 1349 which would form the Financial Accounting Oversight Board, which, if enacted into law, would get to whip the shit out of the FASB whenever it wanted to.

Which I guess would be necessary because when lawmakers forget about the FASB, that allows them to sit up in CT and write rules that actually reflect some transparency. Once those rules become a problem for companies that contribute money to political campaigns, then Congress gets the torches out and beancounter witchhunt is on.

Dartboard valuation seems to be a more fun way for banks to figure out what pieces of paper are worth anyway. Sphere: Related Content